Relief as Treasury releases Sh7bn for tax refunds


Relief as Treasury releases Sh7bn for tax refunds

The government has released Sh7.1 billion to the Kenya Revenue Authority (KRA) to clear outstanding tax refunds.

The move will offer relief to firms that have been looking to improve internal cash flows but have had funds held up by the taxman.

Companies and individual business people are the biggest winners of the amount released, after MPs in June this year approved the release of the value added tax (VAT) refund funds, in the second mini budget.

Speaking during the launch of the 2016 Taxpayers Month in Nairobi, Treasury Cabinet Secretary Henry Rotich said the ministry and KRA would review and disburse the payments within the next two months.

The amount represents 78 percent of the Sh12 billion owed to businesses in refunds since 2013 backwards.

“At the National Treasury, we do recognize that an efficient and effective tax administration is key to economic growth. The refunds process, therefore shows support to our manufacturers and equips them to better compete among global exporters,” he said.

Mr Rotich further said that the National Treasury continues to commit substantial amounts of resources to KRA, deepen the revenue administration reforms that the Authority is undertaking.

“The overall objective of the reforms agenda is to create organizational responsiveness, integrity and technology-driven service delivery,” Mr Rotich said.

Tax experts have continuously called on KRA to ensure taxation laws are amended, to allow the tax collector retain a percentage of collections from VAT to ease the claims backlog.

The Treasury has in the past blamed a huge backlog of billions of shillings in unpaid tax refunds on people who make false claims.

KRA Commissioner General John Njiraini said the authority has set up a new web based platform, which will enable KRA staff and members of the public report cases of tax related fraud, to help seal revenue leakage and loopholes, while ensuring efficient service delivery to customers.

“We have undertaken internal process reforms meant to underpin the new approach. These reforms include the restructuring of tax audit processes to ensure proper governance in varied areas such as case selection, audit execution and communication of audit findings,” Mr Njiraini said.

Through the new automated i-Tax system, KRA generates the withholding tax instantly.

The new regime demands that a business must lodge a VAT refund claim within 12 months as opposed to the former system that could run for three years leading to backlogs.

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Story By Michael Karanja
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